The opinion of the court was delivered by: Kahn
The subject property is located in the City of Englewood, known as 120 S. Woodland Street (Block 3202, Lot 8), in an area frequently referred to as "Englewood's East Hill." The parties acknowledge this area to be a prestigious, desirable location consisting of large homes on substantial wooded lots. This location is a short distance from New York City, and is near schools and transportation. In this area are located many older homes similar to the subject as well as newly constructed mansion-type homes.
The subject land totals 3.10 acres. The house thereon, constructed in and around 1921, consists of 4,128 sq. ft. of living area. The appraisal experts differ as to certain details, which differences will not seriously affect the outcome but should be noted for the record. The taxpayer's appraisal expert states that the basement totals 1,905 sq. ft., which includes 630 sq. ft. of fair quality finished space. The municipality's expert witness indicates merely that the basement is full and finished with a family room and bathroom.
Taxpayer's witness indicates that the living area consists of nine rooms, including four bedrooms, three full baths, and one-half bath. His description also includes a screened open porch, two-car carport, as well as an in-ground swimming pool, a cabana, and an old abandoned garage which he describes as being in poor, unusable condition. The municipality's expert counts twelve rooms, including five bedrooms, four full bathrooms and one-half bath, as well as a two-car basement garage. Both describe the overall condition as "fair" and both indicate substantial deferred maintenance or functional obsolescence.
The land is clearly irregularly shaped as demonstrated by copies of the plot plan referred to in the appraisal reports.
The taxpayer's appraisal expert utilizes solely a market sales approach, citing four comparable improved sales for use in determining value as of October 1, 1993 and three comparable sales for the 1995 tax year. The four comparables utilized for 1994 were all located in the City of Englewood, specifically the "East Hill" area. The witness utilized the sales prices for each of the four comparables and made adjustments for numerous criteria in order to arrive at value for the subject. Sale No. 1, for example, took place in April 1993, sale No. 2 in August 1993, and sales Nos. 3 and 4 in September 1993. The witness made no adjustments for time. The sales prices range from a low of $730,000 (comparable No. 3) to a high of $1,000,000 (comparable No. 1). The expert's most significant adjustments in terms of amount involves lot size (with respect to the land), quality (referring to construction) and condition (also referring to both exterior and interior construction). The last two of these criteria also include functional utility. He also made adjustments for location (comparable No. 3), finished attic (comparables 3 and 4), garage and garage house (comparable No. 3), in-ground pool (comparable No. 2), finished basement (comparable No. 3), fireplaces (all comparables), central air conditioning (comparables 1, 2, and 4).
The result of these adjustments resulted in four adjusted sale prices from a low of $731,000, to a high of $803,025, from which the witness concluded a valuation of the subject property as of October 1, 1993 in the amount of $750,000.
Comparable sales 5, 6, and 7 utilized as comparable sales for the year 1995 (assessment date 10/1/94) also were located in the East Hill area. The witness performed the same analysis with the same type of adjustments from which he found three adjusted sale prices with a low of $690,000 and a high of $752,500. He concluded that the value of the subject property as of 10/1/94 was $735,000.
The essence of the witness's analysis appeared to be that the subject improvements were not in good condition and were not desirable as compared to other properties. For example, he cited that the kitchen consisted of three separate small rooms. He indicated that the subject did not have a fireplace, unlike each of the comparables, and that a prospective purchaser, willing to spend substantial monies, would require one. He cited lower ceiling heights in the subject property than in the comparables. His view of the subject indicated that no actual master bedroom or bath existed. He also indicated that at least one bathroom was accessible from two different bedrooms. In addition, the property contained a swimming pool and a garage that were not in usable condition. Some of his adjustments with respect to the improvements were located in the witness's quality and condition adjustments, which when combined, formed substantial reductions from the comparable sales prices to reflect the diminished value of the subject.
On cross examination, the witness was asked to translate his percentage adjustments into dollars. The witness performed numerous calculations as requested by the municipality's attorney which resulted in varying prices per square foot costs dealing with each adjustment. The witness testified that his analysis was not based on sales derived from the marketplace, only from his own expertise. The witness indicated that his percentage lot size adjustments, when converted to dollar adjustments, varied from approximately $19,000 per acre to $75,000 per acre, depending upon which specific comparable sale was discussed.
With respect to comparable No. 7, it was revealed on cross examination that the purchasers demolished the house and have either erected a new house or are in the process of doing so. Apparently the sale took place in June 1994 and within several months the purchasers began the processes of obtaining permits for the erection of a one-family home. The witness treated this sale in the same manner as his other comparables (improved sale) and did not consider that the property's selling price might have been attributed solely to the land value.
The municipality's expert witness cites the nearly 100% development of the area as being responsible for creating little or no vacant land for development. The witness testified that the current improvement approximately 75 years of age is so functionally obsolete as to have no value in the marketplace. He cited specifically the second floor layout and the kitchen which is divided into several small rooms. Both expert witnesses agree that the house has no central air conditioning or fireplaces; both acknowledge that the swimming pool is currently unusable as is a garage on the premises.
The municipality's witness contends that the improvements on the subject property have no value. Indeed, treating the land as if vacant causes it to be more valuable than the property as currently improved. In support of his position, the municipality's appraisal expert utilizes seven comparable sales which he describes as "vacant land sales" because subsequent to six of the sales, the improvements were demolished and permits were applied for and/or approved for new construction. The seventh sale was a vacant lot of .8 acres which was subdivided from a larger lot and, therefore, did not have to be demolished. For the six sales that involved demolition, defendant's witness adjusted for demolition costs, topography and land size in order to arrive at a per acre value. He also adjusted for zoning, recognizing that the subject was in a RAAA zone (2 acre minimum) and some comparables were located in a one acre minimum and two of the properties were non-conforming uses of less than one acre.
Three of the comparables, namely No. 2, No. 5 and No 7, appeared to be most comparable and contained few adjustments. Comparable No. 2 involved 1.90 acres and sold June 1991 for $1,288,470 with the same zoning (RAAA-2 acre minimum) as the subject. No adjustments were made by the municipality's expert and he arrived at a per acre cost of $444,310. Comparable #5 sold February 25, 1994 for $912,000 and consisted of 3.30 acres. He adjusted the sale upwards 15% because it was an estate sale as opposed to usual market conditions. The adjusted per acre price was $317,817. Comparable No. 7, which sold June 13, 1995 for $1,127,800, consisted of 2.29 acres located in the same zone as the subject. The witness only adjusted the comparable 10% downward because the subject lot consisted of approximately 4/5 of an acre more than the comparable. The adjusted per acre value was $443,130 and the location of these three comparables is in the same East Hill section as the subject and were surrounded by the same type of larger homes as the subject. From these seven comparables, with greater emphasis on comparables No. 2, No. 5, and No. 7, the witness concluded that the value of the subject property as vacant land for both relevant assessment dates should be $400,000 per acre totaling $1,240,000 with no value attributed to the improvements.
The witness also attempted a comparable sales analysis of improved property which resulted in an opinion that the subject, as improved property, should be valued at $1,000,000. He cited three improved sales, again located in the East Hill section, one of which (comparable No. 2) was located on the same street as the subject. Comparable No. 2 involved a sale in June 1993 for $1,300,000. The lot size is 2.13 acres and the living space in the improvement 5,024 sq. ft., consisting of six bedrooms and four and a half bathrooms. There were three fireplaces, a fully finished basement, central air conditioning and an attached two-car garage. The witness rated the improvement as fair for its age. He made adjustments in the main in a downward fashion with respect to the improvement. He rated the condition of the comparable better than the subject. There were 1,000 sq. ft. more of living space than in the subject and the comparable contained one more bathroom, three fireplaces and central air conditioning. The result of this comparison produced an adjusted value of $1,228,000. Using the same technique, comparable No. 1 produced an adjusted value of $876,600 and comparable No. 3 produced an adjusted value of $1,032,500. It should be pointed out that the witness adjusted each of the three comparables for the size of the land. In these improved sales the adjustment for size ...